Eni Profit Falls as Lower Oil Prices Compound Production Halts

April 24 (Bloomberg) -- Eni SpA, Italy’s biggest oil
company, said first-quarter profit fell 42 percent on falling
oil prices and halts to production in Nigeria, Libya and the
United Kingdom.

Adjusted net income for the quarter dropped to 1.43 billion
euros ($1.85 billion) from 2.47 billion euros a year earlier,
the Rome-based company said in a statement. Eni said oil and
natural gas production fell 4.9 percent to 1.6 million barrels
of oil a day in the period because of interruptions to
production.

“We confirm our growth and profitability targets for the
full year 2013, in spite of a slower first quarter,” Chief
Executive Officer Paolo Scaroni said in the statement. The
company said average production will grow this year thanks to
new projects in areas like Algeria and Angola.

Large oil companies are being hurt by lower oil prices.
Brent crude dropped 5 percent in the first quarter of this year
to an average $113 a barrel, and may fall further according to
Goldman Sachs Inc. which cut its forecast for average Brent
prices this year to $100 from $110.

Eni was also damaged by sabotage and theft that cut
production in Nigeria during the first quarter, and clashes
between militia groups that halted production from Libya in
March. The Elgin/Franklin field in the U.K. which hadn’t been
working for a year, restarted in March, the company said.

Production also fell due to the divestment of a 10 percent
stake in the Karachaganak field in Kazakhstan and the reduction
of the stake in Portuguese company Galp Energia SGPS SA.

Falling prices and reduced demand also hurt the gas and
power division which posted an adjusted net loss of 91 million
euros from a profit of 736 million euros. Shrinking demand of
oilfield services and lower margins were responsible for a 52
percent decline in the engineering and construction division’s
adjusted net profit to 130 million euros.

The company said in 2013 it “expects continuing weak
conditions in the European gas, refining and marketing of fuels
and chemical sectors.”